According to analysts at Barclays, a global financial services provider, the new housing plans recently announced by President Obama amount to a revamp of the Home Affordable Refinance Program (HARP), not an all-out expansion.
Fears over the President’s comments have sprung from speculation by the Federal Housing Finance Agency (FHFA) on loan-to-value ratios (LTVs). The FHFA has considered lifting refinancing restrictions for borrowers with high LTVs.
Currently, borrowers with LTVs past the 125 percent mark face barriers to refinancing, and the FHFA’s plans have spooked some investors, who fear the plan would amount to an expansion of HARP.
“It seems that the FHFA is not looking to increase the amount of borrowers eligible for the HARP program by expanding the cut-off date, but is rather looking to enhance the efficacy of the existing program for current HARP-eligible borrowers,” according to the Barclays analysts.
Barclays also said that if anything, the FHFA’s new approach would be a positive for LTV refinancing, as it would better clarify who was eligible for refinancing.
“There is also likely to be a renewed focus on refinancing high LTV borrowers with strong pay histories, in a shift from the current scenario, where it effectively became a streamlined refinancing vehicle for low LTV borrowers,” the analysts said.